5 Tips To Manage Your Personal Finances.
- 14 September 2020
- Posted by: Sanjana Gavand
- Category: Finance
If you ask me what’s my favorite thing about childhood, it would definitely be – not have to pay the bills. Sure, we all love our freedom but with freedom comes responsibilities. And managing your personal finances is not an easy task (Trust me on this one!).
But, as they say, where there is a will there is a way. If you start keeping track of all income and expenses, you can plan out your finances accordingly so that you make sure you are not spending over those Nike’s, when in fact you are barely able to pay for your utilities.
Here are a few things to keep in mind while planning out your finances to make sure you keep on track:
1. Spend Less Than You Earn.
This is by far the most important thing to keep in mind when you are planning other personal finances. Walking out your credit card surely seems like and lovely endeavor but this would end you in dept. Planning your credit expenses could lead to the development of good credit scores, but unplanned credit expenses could land you in bad credit.
2. Make A Budget And Stick To It.
Having a plan is very important even when it comes to your personal finances. Usually, the 50-30-20 budget model is the most preferred one, it doesn’t necessarily have to work out for everyone an individual can plan out his personal expenses with respect to his own requirements.
3. Saving Vs. Investing.
Often confused as being one and the same thing, savings, and investment are actually two wholly different concepts. While savings need for the short term and also should preferably be liquid and accessible, investments usually focus on planning the long term finances. investment should be made with an aim to earn the maximum amount of ROI over a long period of time.
4. Invest Instead Of Just Spending.
Apart from having to pay for utilities and entertainment expenses, one has to take care of certain household expenses as well, like buying a new piece of furniture or a new car, etcetera etcetera. Even while making expenses one should have to make sure that they are not just pending on the luxuries without actually seeing its utility for us in the long run.
5. Have A Passive Source Of Income.
Uncertainty is don’t come knocking at your door. You never even know when that recession will kick in, and just like that, you may lose your job (Although, we never wish for it to happen). Hence it is always advisable to have a passive source of income to have good financial stability.
Having the discipline of your personal finances is very crucial for having a stable financial future. Most of us may not realize it in this instance, having a financial plan does benefit greatly in the long run. Not only this but it also sets us out on the right path to have personal discipline and order in managing our own lives.